Executive Times






2006 Book Reviews


Revolutionary Wealth by Alvin and Heidi Toffler




(Mildly Recommended)




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Chances are, if you liked earlier Toffler books, you’ll like the latest Alvin and Heidi Toffler offering, Revolutionary Wealth. It’s both obvious and tedious that this work evolved from the author’s past work, and readers can almost visualize the snippets of clipped facts from here, there and everywhere that fills the pages of Revolutionary Wealth with a somewhat scattered collection of tidbits. Here’s an excerpt, all of Chapter 4, “Deep Fundamentals,” pp. 24-28:


Every morning, millions of people around the world blink their eyes open and immediately check the Web for stock-market prices, scan the business pages of their newspaper, tune in to the latest business news on TV—or do all three. Only then do they worry about breakfast.

Some, no doubt, would be willing to embed a microchip in their brain if it would automatically alert them to the latest twitch in interest rates or changes in their stock portfolio. Before long, some will.

Until then, housewives in Shanghai, cabdrivers in New York, and currency traders in Frankfurt will have to make do with the close-to-real-time informa­tion pumped out, 86,400 seconds a day, by Reuters, Bloomberg, CNBC, CNN, BBC, and their partners and rivals around the world. Providing all this news, online and off, has itself become a global industry.

No one can pretend to understand how the media and its unprecedented output of information (and misinformation) influence and distort stock markets and the world money economy. Nonetheless, amid all the clamor, experts confidently attribute an astonishing variety of stock-market swings, business shifts and economic ups and downs to changes in what they call “fundamentals.”

General Motors’ chief economist allows that “mainstream economic fun­damentals remain strong.” The chairman of Time Warner Telecom attributes its success in a weak economy to its “sound business fundamentals” despite the odd fact that its stock price had plummeted 90 percent in the previous twelve months.

A top economist at Credit Suisse First Boston urges investors to look at Russia’s “economic fundamentals, rather than its recent history.” A high-level Chinese official ascribes the strong export market to “economic fundamentals.”

What exactly we mean by that term, however, remains extremely hazy. ~epending on who does the talking, it includes factors like “low inflation,” “sound credit quality” and “world prices for gold and copper.” Or maybe not.

During the wild run-up of the U.S. stock market in the 1990s, economists threw into the definitional gumbo such supposedly fundamental variables as a balanced government budget, a strong manufacturing sector, the presence or absence of a global central bank, the disparity between stock prices and prof­its, levels of personal borrowing and the percentage of low-wage jobs, not to mention increased bankruptcies.

No doubt some of these variables are important—sometimes. But what if, in fact, by focusing on them we miss some things that are even more impor­tant? What if all such factors depend, directly or not, on a deeper set of forces—”deep fundamentals,” so to speak, that shape the more superficial fundamentals themselves?

What if the fundamentals tell us one thing and the deep fundamentals another? And what if these more basic, more potent factors are themselves changing at high speed?





Christian theologians use the term inerrantists for those who insist that, even after two thousand years of problematic interpretations and mistranslations, the Bible is error-free, and that, moreover, its every word must be understood in its most literal sense.

Economics has its own inerrantists who maintain, in the face of all sorts of anomalous, puzzling and contradictory evidence, that nothing has really changed. At the “fundamental” level, they claim the economy has been only minimally affected by the digital upheaval and the shift to a knowledge-based economy.

The manager of one of America’s biggest mutual funds reassures an audi­ence of European petrochemical executives that, in finance, things always go up and down, so what’s new? Brent Moulton, then an official of the U.S. Bureau of Economic Analysis—a government agency that measures with greater and greater precision variables that mean less and less—advises us that “the economy is still the same as it was before.”

This illusion, however, becomes unsustainable the minute we shift our gaze from the everyday fundamentals to the deeper ones. For it is at this deeper level that we find the most compelling evidence that the economy is not “as it was before”—that, in fact, today’s entire structure of wealth creation is quaking and rocking, suggesting even bigger changes to come.




Not only are there such sub-surface fundamentals, but there is a coherent way of determining what they are.

Across the planet today, as we’ve just seen, we find three markedly differ­ent wealth-making systems, crudely symbolized by the plow, the assembly line and the computer. The first thing we need to know is that much of what today passes for “fundamental” is not present in all of them. For example, while “a strong manufacturing sector” virtually defines the industrial wealth system, it was vestigial in pre-industrial peasant economies—and still is in many parts of the world.

Again, while the Federal Reserve and central banks in general have played a key role throughout the industrial age, they did not exist as such in pre­industrial societies, and they may not in the future. No less a worthy than the governor of the Bank of England, Mervyn King, has suggested that they may disappear, since many of their functions will no longer be needed or will be carried out automatically by the electronic infrastructure. Among the many so-called fundamentals, in short, some are relevant only for societies at one stage of development and not another.

By contrast, some fundamentals are so vital to wealth creation that they matter in all economies, at all stages of development, in all cultures and every civilization, past or present.

These are the deep fundamentals.





Some of the deep fundamentals are obvious. For example, work.

It may come as a surprise to many that, until field labor was replaced by factory work, few of our ancestors ever held a job. This surely wasn’t because they were rich. Most were wretchedly poor. They didn’t hold jobs because the “job,” in today’s sense of formally committed work in return for stipulated pay, had not yet been invented. Like the steam engine and other industrial innovations, jobs and wage labor became widespread only during the last three centuries.

Work itself was transferred from outdoors to indoors, on schedules set no longer by sunrise and sunset but by the punch clock. Most payment came in the form of wages based on hours worked. Indeed, these arrangements essen­tially defined the term job.

But the job is only one way of packaging work. And as the latest, knowledge-based wealth system unfolds, we are moving toward a future in which, as we’ll see, more people “work” but fewer hold ‘lobs.” It will drasti­cally alter labor relations, human resource departments, legislation and the overall labor market. It is bad news for trade unions as we know them. The deep fundamental of work is changing more profoundly than at any time since the industrial revolution.

Division of labor, like work itself, traces back to hunting and gathering, when the division was mainly based on gender. But here, too, we are approaching a turning point.

Ever hear of a “metallurgy and failure analysis litigation consultant” or a “post-harvest horticulturalist”? Neither have most of us. (The latter is the superspecialist who determines such things as how many microscopic holes are needed to admit oxygen into the plastic bags that hold vegetables in the supermarket.)

Adam Smith in 1776 called the division of labor the source of “the greatest improvement in the productive powers of labour.” And this has been true ever since. But the more refined and specialized tasks become, the harder and more expensive it becomes to integrate them—especially in an innovation-driven competitive economy.

At some point, the costs of integration may exceed the value of such super-specialization. Moreover, narrowly focused specialists may be good at incre­mental innovation. But breakthrough innovation is often the product of temporary teams whose members cross disciplinary boundaries—at a time when breakthroughs in every field are, in fact, blurring those very boundaries. And this is not just a matter for scientists and researchers.

The new wealth system demands a complete shake-up in the way increas­ingly temporary skill sets are organized for increasingly temporary purposes throughout the economy. Nothing is more deeply fundamental to the creation of wealth.

Not only are work and the division of labor changing, but income distribu­tion itself—the “who gets what?”—may be heading, over the long term, toward truly revolutionary change.





These are just a few examples of fundamentals that lie beneath the “funda­mentals.” And they are even more important than they may seem because they form a system. Thus, changes in the deep fundamentals interact with one another. Moreover, the limited examples cited so far are just that—limited. A fuller list would surely include others—energy, the environment and family structure, for example—all changing at high speed, all shaking the ground Under the more superficial, everyday fundamentals.

Many of the deep fundamentals have received scrutiny from time to time. For example, since the 1970s, the relationship between the biosphere and wealth creation has become the center of global concern and controversy.

By contrast, several of the deep fundamentals most relevant to revolution­ary wealth have, in fact, received scant attention.

That, therefore, takes us on a journey to strange, largely unknown territory to probe three of the fastest-changing, most powerful and most fascinating of all the deep fundamentals today—three that will without question shape the future of wealth.


If pressed to answer whether there’s anything new on these pages, I’d be unlikely to point my finger at more than one or two things. The repetition within the book became tedious at times, and the organization seemed odd. The authors’ jargon, especially their own made-up words, became infuriating at times. Even with these shortcomings, Revolutionary Wealth is recommended to readers as another source of thinking about what the events of the present may mean for the future. Hold your nose or roll your eyes for the bits that are purely rot, and enjoy those rare snippets that will help you think differently about what’s ahead.


Steve Hopkins, June 26, 2006



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The recommendation rating for this book appeared

 in the July 2006 issue of Executive Times


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